WND EXCLUSIVE

City smacks Christian school with mind-blowing fees

Bob Unruh joined WND in 2006 after nearly three decades with the Associated Press, as well as several Upper Midwest newspapers, where he covered everything from legislative battles and sports to tornadoes and homicidal survivalists. He is also a photographer whose scenic work has been used commercially.

A city that was caught double-charging nonprofit water and sewer system users now has adopted a new rate structure that specifically targets the whistleblower with an extra $240,000 in coming fees, according to officials with the school that raised the issue.

The new fee structure adopted by Canyonville, Ore., is scheduled starting June 15 to raise by a huge amount the fees charged to Canyonville Christian Academy through a decision to classify individual dorm rooms without running water at the same rate as multiple-bedroom condominiums or apartments.

School officials feel the decision was retaliatory for their complaints about city procedures that for years had charged churches and nonprofits double the ordinary water and sewer fees.

In fact, a school spokesman pointed to the action by city officials, who canceled the double-charging ordinance at a council meeting, but within minutes at the same meeting had decided to reclassify the school’s dorm rooms as apartments.

And city administrator Janelle Evans told WND that when the city was confronted with the issue over improper double-billings, officials reviewed their fee structure and made structural changes to the system that results only in additional charges to CCA.

The issue actually developed almost two years ago when CCA, through an ordinary audit, found it was being billed – and for years had been billed – at a rate double the ordinary rate in the Oregon town.

Eventually, after unsuccessfully trying to negotiate with the city over a resolution, CCA asked for a court resolution, and the city abruptly canceled its double-billing practice.

However, at the same time, the city told school officials their on-campus housing of a couple of dozen dorm rooms in three buildings would in the future be billed as if each of the individual dorm rooms were a separate apartment or condo.

School officials told WND this will be an increase in costs for the school of thousands of dollars per month.

“I think it is important for people to know that we applaud the city for changing its policy,” said Roger Shaffer a member of the board for CCA. “We also just want to be treated fairly as well.”

He told WND that although the city has reached settlements and made payments to other nonprofits that had been overcharged because of the city’s previous double-billing for charities, there has been no reasonable offer to resolve the school’s issue, which was estimated to be an overpayment of some $200,000 over the years.

Shaffer told WND he believes a large part of the issue has developed from a lack of attention on the part of city officials. For example, he said as part of the investigation of the dispute, it was revealed that the school for years had been paying double charges for the water delivered to the home of city councilman Ed Parker, whose property is adjacent to the school.

Shaffer said the water flowing to the house went through the CCA meter, and then into another meter in front of Parker’s home. That means since the school was being double-billed, they school was paying twice for the same water that the councilman separately was paying for based on his own meter.

Further, the school was being assessed sewer charges based on water usage at the councilman’s home even though the residence has a septic system and leach field, and is not connected to the city system.

Shaffer said he doesn’t believe there was any intent to defraud, but the situation highlights the inability of the city’s administrators to grasp the extent of the problems that exist.

“I don’t even think they realized they were doing it,” he told WND. But he said even small mistakes in billing, added up over the years, create significant burdens to the school and its ministry.

The main concern now is the nearly quarter of a million dollars that will be billed to the school over coming years because of the reclassification from dorm room to apartment.

“We feel it’s absolutely retaliatory,” he told WND.

He said that perception was based on the fact city officials canceled the challenged rate structure that double-charged charities and schools, and immediately created the new classification that will double CCA’s billings, charging even a 10 foot by 10 foot unplumbed dorm room the same rate as a multiple bedroom apartment with many family members living there.

Further, he said, the city for nearly 100 years has classified the dorms as part of the school, and now suddenly the “radical change” to call them apartments is being made.

In fact, Evans forwarded to WND a recent city announcement that it had reached “agreements” with all of the affected water and sewer system users that had been targeted with double charges – except one, CCA.

The city admitted it was trying to collected payments that would cover what would have been charged in taxes if the community members had not been tax-exempt.

“In the 1970s when the city’s water and sewer rate system was established a special classification was made for all non-taxpaying users. Since the infrastructure was being financed 50 percent from user fees and 50 percent from taxes, a rate structure was enacted that included double water charges and sewer fees in lieu of taxes for users in the non-taxpaying classification.”

The statement continued, “In response to concerns, the city recently amended it water and sewer ordinances and no longer charges these fees to non-taxpaying users.”

The statement said, “The city believed it was in the best interest of all the rate payers to offer a settlement to the other users in the non-taxpaying classification for any potential liability rather than expend the additional funds to settle the issue in court.”

However, school officials said that was not the case for their situation. They say the changes brought about because of their complaint have resulted in the city’s decision to target them with higher charges.

Evans confirmed as much to WND, stating that the reclassification of the school’s dorm rooms was not considered until after the school raised its concerns about the city’s procedure to double-bill.

And Shaffer confirmed the city now is pressed for cash because the Environmental Protection Agency has criticized its current treatment system, and a new facility is estimated to cost $12.5 million – or in the neighborhood of $30,000 per family in the town.

The school’s current request is for credits of $85,000 over the double-billing, which takes the issue back as far as the statute of limitations allows. But Shaffer said the city refused.

He said the school considers the city’s agenda to keep charging the school much higher fees improper. What if the school would knock down walls between dorm rooms, he wondered. Would there then be 15 rooms – and 15 charges – for a dorm rather than 30 rooms, and 30 charges?

“That’s how silly it gets,” he said.

But he said the issue is significant because of the possible precedent. If Canyonville succeeds in classifying each dorm room as an apartment, what then could happen to similar fees charged to very large schools, Liberty University, for example, with its tens of thousands of students.

Evans told WND that the city decided that even though the dorms previously had been classified as school property, they were not, in fact, “a school.”

She said when the controversy arose, the city reviewed its charges, and the only change that was made to for the school.

“There haven’t been any other classification changes,” she confirmed.

The school said the internal audit revealed the overcharging in 2010, and a review suggested that failed the Constitution’s equal protection requirements. In 2011, the CCA asked the city to explain the double-billing, suggesting it would not be constitutional.

The school later made its settlement offer, which was refused.

Meanwhile, the city continued the double-billing.

A school official has described the inequity involved.

“Like typical dorm rooms at the University of Oregon or Oregon State University, our rooms are essentially bedrooms with a study desk. Many of our rooms are for a single student and they do not have water going in or out, as a condo or apartment certainly would have. Fifteen of our dorm rooms will be charged $43 per month plus overage charges for use above 1,200 cubic feet per month. Each additional bedroom will be charged $27.02. This means that a 100 square foot room at CCA will now be treated the same as a three-bedroom house with two baths.”

The results will be that “our sewer rates will be roughly five times what a typical family pays for the same quantity of service. We believe that reasonable citizens will find this to be unjust and we also contend that it is likely that the courts will find it is not permitted by Oregon law.”

Doug Wead, a New York Times bestselling author who is on the school board, has confirmed that the city has not extended itself in trying to resolve the double-billings.

News of the dispute has spread to Yahoo.com and even was the subject of comment by Sir David Frost on his broadcast: